The Greater Toronto Area’s (GTA) office market showed disappointing results in the third quarter, Avison Young reports.

The Third Quarter 2013 Greater Toronto Area Office Market Report records falling occupancy levels, including an increase in the sublet market, which jumped 30 per cent to reach 3.7-million square feet in the past year. Meanwhile, a new wave of office development is expected to begin later this year, continuing through 2017.

“It appears that 2013 may turn out to be one of the least impressive performances in some time and may signal the end of the recent bull run,” says Bill Argeropoulos, vice president and director of research (Canada) for Avison Young. “Notwithstanding these results, corporate Canada remains intact with ample cash on hand to expand its operations, while the development community is obviously looking beyond the current malaise and proceeding with some degree of confidence.”

According to the report, overall vacancy in the GTA has been climbing slowly, closing at 8.8 per cent in the third quarter. This is up 20 basis points (bps) from the second quarter, and 70 bps from the third quarter in 2012. There was also a jump in overall availability (the space that is marketed for lease), which climbed to 11.4 per cent, up 90 bps from the second quarter, and 220 bps from the third quarter in 2012. Both overall vacancy rate and overall availability have reached three-year highs.

There has been a rise in available sublet space in downtown Toronto, climbing 525,000 square feet in the past year, with the majority of space in Class A buildings in the Financial District. Sublet space makes up 20 per cent of all available space.